NAI Benchmark

Finding great deals is something that you have to work on everyday and it should be a key goal to be in a financially sound enough position that you can work diligently for many months and years at finding and buying great deals. It would have been very difficult to forecast that large of a drop but commercial real estate moves in market cycles and there are a number of tools that you can use to understand where you currently are in the market cycle and which strategies you should deploy. The commercial real estate cycle correlates with the Business Cycle,  though property trends tend to lag business trends because it takes time for businesses to decide to expand and to have the capital necessary to invest in expansion. It takes years to find great deals to buy, great tenants to occupy, and the right market timing to buy and sell.

In every shopping center in America, there is a huge piece of of bituminous pitch mixed with sand and gravel (also known as asphalt) that must be maintained and carefully cared for and the job generally falls to commercial property managers who may or may not be experienced in this area. As the graphic below shows, $1 spent in the first 10 years will save your having to spend $6-$10 in the last 10 years of a parking lots lifespan. Making things worse, cars and commercial trucks but their weight on it over and over and often, commercial parking lots have been under engineered and are are not built to handle the weight of large trucks. As one section of asphalt gets week and cracks, water enters that area and weakens the asphalt around it.

It requires that companies hold lease obligations as liabilities on their books where as before, it was simply an off balance sheet item. This changes the incentives for companies and they are much more likely to own their real estate rather than have a developer build it for them and lease it back to them. This is likely to have a chilling effect on build-to-suit activity and profitability. Joe Muratore, CCIM was a featured expert in this article along with CCIM Chief Economist K. C. Conway MAI, CCIM.

The Baby Boomers built shopping centers and malls all across the country and now, as 80,000 stores close across the US by 2025, generations X and Y will reinvent the asset class as new development activity stays in decline and infill redevelopment increases. In the 1960’s, 70’s and 80’s, shopping centers and malls were being built at a breakneck speed with retail construction peaking in 1985. New development in the coming decades will be minimized as all this retail space is repurposed to serve a growing, increasingly Hispanic population. The Hispanic population, according to the PEW Research Center, the Hispanic population will grow from 55,000,000 in 2015 to 110,000,000 in 2050.